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Apple Financial Comparison

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Analysis
The results of the DuPont analysis revealed that both companies exceed the desirable market level of 15 to 20% (Boundless, n.d.). There is a consistent increase in ROE for the past three years across Microsoft and a steady ROE for Apple after a big increase in 2015. Apple has the highest ROE of the two companies for the past three years, 36% in 2017, 2016 and 45% in 2015 (Apple Inc, n.d.). Apple has made several acquisitions over the past three years that were closely related to their technical product lines making it easy to incorporate into their existing and future technologies (Maestri, 2017). ROE serves as an important financial measurement that determines if past investments have generated an improved required rate of return, for …show more content…

Evaluation of other financial areas.
Capital Spending:
Microsoft’s high gross margin allows the company to devote more resources to better operate its core business. Microsoft’s 62 % gross margin in 2017 allowed them to commit over 13 billion dollars to research development and engineering in comparison to their 2016 12 billion dollar commitment (Microsoft Corp, 2017).
Credit Rating Service:
Depending on the source, MSFT credit for 2017 is being reported as AAA or AA. The fluctuation arises from Microsoft 2016 Acquisition of LinkedIn for 27 billion dollars and perceived weakness in their cash flow cushion due to rapid shareholder payouts (Stone, 2017). However, MSFT credit risk level remains low due to their ability to utilize reoccurring revenue and a stable margin to ensure a constant sturdy cash flow (Stone, 2017).
Bond Rating Valuation:
MSFT saw its highest Bond valuation of AAA in seven years due to a 19.75 billion bond sale in August of 2016, which was the third largest corporate bond that year (Johnston, 2017). With their debt as order books being in such high demand, selling over 50 billion, they were able to borrow at a cheaper rate and issue 30 year bonds at 3.7% year end 2016 (Johnston, 2016).
Beta

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